64 CBJ 43. Connecticut Probate Law 1989.

• Author: By M. KATHERINE GLASSMAN AND MARIE T. FALSEY (fn*)

Connecticut Bar Journal

Volume 64.

64 CBJ 43.

Connecticut Probate Law 1989

Connecticut Probate Law 1989By M. KATHERINE GLASSMAN AND MARIE T. FALSEY (fn*)I. LEGISLATION

1. Decedents' Estate

   The Connecticut General Assembly enacted two pieces of legislation in 1989 that affect decedents' estates. (fn1) One of these acts (fn2) concerns the applicability of the abandonment provisions of Section 45-273a to a surviving spouse's in testate share. (fn3) This statutory amendment provides that a surviving husband or wife who has abandoned his or her spouse is not entitled to take either an elective share or an in testate share from that spouse. (fn4)

   The second act (fn5) makes several important revisions concerning claims against estates. The first change concerns a fiduciary's liability for distributing estate assets. (fn6) Under prior law, (fn7) a creditor who did not present its claim to an estate's fiduciary within 210 days from the date of the fiduciary's appointment could not hold the fiduciary chargeable for assets paid or distributed to any beneficiary in satisfaction of any lawful claims, expenses or taxes before the creditor's claim was presented. The new law reduces the 210 day period to 150 days. (fn8) A second change (fn9) is the elimination of the requirement that probate courts notify beneficiaries that they can require the fiduciary to notify specific creditors of their right to present claims against the estate. (fn10) A third pro-vision (fn11) changes the outside date beyond which a claimant is barred from presenting an ante mortem claim or instituting suit on such a claim. Previously, this date was two years from the date of appointment of the first fiduciary; now, it is two years from the decedent's death.

2. Bank Accounts

   The legislature also passed legislation creating durable power of attorney bank accounts. (fn12) This law allows an account holder to designate an agent (fn13) who will have the right to make deposits and to withdraw funds from, or draw checks on, the account. (fn14) As with other durable powers of attorney, a major advantage of this type of account is that the agent's authority survives the subsequent disability or incompetence of the principal. (fn15) Financial institutions that choose to offer durable power of attorney bank accounts (fn16) are relieved of liability when they make payments of funds held in power of attorney accounts if they follow certain procedures. (fn17)

3. Rule Against Perpetuities

   Connecticut has now adopted the Uniform Statutory Rule Against Perpetuities. (fn18) This new law retains the common law rule, but changes the statutory exception to that rule. (fn19) The exception now provides that a non-vested property interest is valid if it vests or terminates within ninety years after its creation. (fn20) The issue posed by the new exception is to determine when a non-vested property interest is created. Under the new law, the general rule is that the time of creation of a non-vested property interest or a power of appointment is determined under general rules of property law. (fn21) The exceptions to this general rule are as follows: (A) if there is a person who alone can exercise a power created by a governing instrument to become the unqualified beneficial owner of (1) a non-vested property interest or (2) a property interest subject to a Power of appointment that either is (a) a general power or appointment not presently exercisable because of a condition precedent, or (b) a non-general power of appointment or a general testamentary power of appointment, then the non-vested property interest or power or appointment is created when Te power to become the unqualified beneficial owner terminates; and

   (B) a non-vested property interest or a power of appointment arising from a transfer of property to a previously funded trust or other existing property arrangement is created when the non-vested property interest or power of appointment in the original contribution was created.

   The uniform rule also provides that, under specified circumstances, a court may reform a disposition so that it complies with the ninety year period. (fn22) This legislation excludes, with certain exceptions, the application of the rule against perpetuities to non-vested property interests and powers of appointment arising out of non-donative transfers, as well as certain other interests. Section 5 of the 1989 Act provides that the rule against perpetuities does not apply to the following: (1) A non-vested property interest or a power of appointment arising out of a non-donative transfer, except a non-vested property interest or a power of appointment arising out of (A) premarital or post-marital agreement, (B) a separation or divorce settlement, (C) a spouse's election, (D) a similar arrangement arising out or a prospective, existing or previous marital relationship between the parties, (E) a contract to make or not to revoke a will or trust, (F) a contract to exercise or not to exercise a power of appointment, (G) a transfer in satisfaction of a duty of support, or (H) a reciprocal transfer;

   (2) A fiduciary's power relating to the administration or management of assets, including the power of a fiduciary to sell, lease or mortgage property, and the power of a fiduciary to determine principal and income;

   (3) A power to appoint a fiduciary;

   (4) A discretionary power of a trustee to distribute principal before termination of a trust to a beneficiary having an indefeasibly vested interest in the income and principal;

   (5) A nonvested property interest held by a charity, government or governmental agency or subdivision, if the nonvested property interest is preceded by an interest held by another charity, government or governmental agency or subdivision;

   (6) A nonvested property interest in or a power of appointment with respect to a trust or other property arrangement forming part of a pension, profit-sharing, stock bonus, health, disability, death benefit, income deferral or other current or deferred benefit plan for one or more employees, independent contractors or their beneficiaries or spouses, to which contributions are made for the purpose of distributing to or for the benefit of the participants or their beneficiaries or spouses the property, income or principal in the trust or other property arrangement, except a nonvested proper interest or a power of appointment that is created by an election of a participant or a beneficiary or spouse; or

   (7) A property interest, power of appointment or arrangement that was not subject to the common law rule against perpetuities or is excluded by another statute of this state.

   Except in limited cases, the law applies to nonvested property interests and powers of appointment created on and after October 1, 1989. (fn23) Practitioners may want to consider incorporating appropriate provisions of the new rule into their estate planning documents executed after the law's effective date.

4. Government Assistance

   Public Act 89-317 (fn24) amended Connecticut's Medicaid law, which concerns the transfer of assets for the purpose of becoming eligible for government assistance, to bring it into conformity with the Medicare Catastrophic Coverage Act (MCCA) of 1988. (fn25) The new law applies only to institutionalized individuals, rather than to all Medicaid applicants and recipients; ii increases the "look back" period from 24 to 30 months; and it establishes provisions for income protection and resource allocations. (fn26)

5. Long-Term Care

   The legislature enacted two significant pieces of legislation in 1989 (fn27) dealing with long term care, an area of increasing concern to many of the probate bar's elderly clients. Under the first act, the statute governing long term care policies (fn28) was amended so that, at a minimum, such policies include benefits for confinement in a nursing home, and that any additional benefits provided be related to long-term treatment of an injury, illness or loss of functional capacity. (fn29) The second act (fn30) establishes a six-year pilot program (the Connecticut Partnership for Long Term Care) under which individuals may purchase long term care insurance that pays for nursing home care and other services approved or covered by Medicaid, and allows them to protect some of their assets in the event that they need Medicaid assistance. (fn31) Individuals who buy or renew precertified policies during the pilot period will receive asset protection for life. (fn32)

6. Trust Accounting

   Section 45-267 of the general statutes, governing accounts of fiduciaries, was amended in the 1989 legislative session. (fn33) Under prior law, a trustee of an inter vivos trust could apply to the probate court for a review of his account. Likewise, a settler of such a trust could apply to the court to order the trustee to submit an accounting to the court. A beneficiary, however, had no such right. The new amendment corrects this anomaly by extending to beneficiaries of inter vivos trusts the right to petition the probate court for an accounting by the trustee. (fn34)

7. Miscellaneous

   1. Adoption

   Section 45-63 of the statutes has been amended to provide that the Interstate Compact on the Placement of Children applies to placements of children for adoption or foster care across state lines. (fn35)

   2. Conservatorship

   Under Section 45-70c of the General Statutes, respondents in conservator- ship proceedings who are unable to request or obtain counsel for any...